Just weeks after leading a grueling but successful battle for passage of a bill to build a new Fenway Park, Red Sox chief executive John Harrington announced yesterday that he is selling the Yawkey Trust’s controlling interest in the storied franchise.
At an emotional news conference in Fenway Park’s 600 Club, Harrington said he would have preferred to sell the trust’s majority stake in the team after ground was broken on a new ballpark. But he said that obtaining private financing and negotiating city and environmental approvals would take longer than anticipated, and that it made sense to bring in new owners so they could participate in shaping the final funding package and deciding whether to make any changes in the ballpark plan.
“The team is in strong financial shape; we’ve had record-breaking attendance this year; we got a ballpark bill passed on Beacon Hill with $312 million in public aid; and the economy is booming,” Harrington said. “It’s the right time to sell.”
Harrington added: “God willing, my last act will be to turn this incredible team over to a diehard Red Sox fan from New England who knows how important the team is to this town and the fabric of this community.”
There is no shortage of potential buyers, both locally and around the country. Harrington has collected a drawer full of letters from possible bidders over the years asking him to let them know when the team is put on the auction block. He even keeps a list in his wallet, as a reminder that his role as trustee of the trust that runs the team is not permanent. The Red Sox declined to identify any possible bidders.
As head of the charitable trust set up by the late Red Sox owner Jean Yawkey, Harrington said he has an obligation to get the highest price he can for the team. He said although he preferred selling the team to a New Englander, out-of-towners will have an equal opportunity to bid.
Harrington noted that longtime Red Sox owner and South Carolina native Tom Yawkey “became a New Englander” by moving to Boston, and that Major League Baseball requires local residency for team owners, so “anyone can become a New Englander as long as they’re a Red Sox fan.”
“God willing, my last act will be to turn this incredible team over to a diehard Red Sox fan from New England who knows how important the team is to this town and the fabric of this community.”John Harrington
He also said he does not expect the team to be moved to another city. “No owner would turn his back on 2.6 million ardent fans that came to Fenway this season,” he said. “I’ve always said, `Every kid in this town wants to be Nomar [Garciaparra] and every kid over 40 wants to be me.”
While Harrington declined to suggest how much the trust’s 53 percent stake would command, sports financing experts estimate the trust’s share could generate anywhere from $200 million to $300 million. Given that the Red Sox play in a major media market and have an extremely loyal fan base in New England and around the country, the price could go higher, some observers say.
Others note that the highest price ever paid for a baseball team was $320 million for the Cleveland Indians, although they acknowledge that the Red Sox are worth more.
Most analysts agreed with Harrington’s decision to sell now.
“It’s the right time to put the Yawkey’s interests up for sale,” said sports investment banker Robert Caporale of Game Plan LLC. “We have a robust economy, there’s been improvement in the business of Major League Baseball as evidenced by the most recent TV contract, and if the team was saddled with debt in order to build the new ballpark, that could adversely impact the price the Yawkey Trust could command for its majority interest.”
The Jean R. Yawkey Trust, which has owned the team since the widow of owner Tom Yawkey died in 1992, has been trying to get financing to construct a $350 million ballpark, which would be built on land adjacent to Fenway.
But in recent months the team has been struggling to obtain funding, in large part because the bill passed by state lawmakers this summer required the team to pick up any cost overruns related to acquiring and cleaning up the site.
Although he acknowledged that the team’s hope of building a ballpark by 2004 “looks very unlikely,” Harrington insisted that a new owner will be able to finance and build the new Fenway Park as the Red Sox have planned. He noted that the team had recently received a favorable analysis from Salomon Smith Barney, a Wall Street investment firm, saying that the deal could win financing.
Saying that the process of identifying qualified buyers and putting the team out to bid could take up to a year or more, Harrington pledged to help new owners finalize a deal to build a new ballpark.
“This project can move forward,” Harrington said. “The private financing can be put in place. The public financing is in place. We have investment bankers who have told us ways it can be done, and we expect to get more encouraging news on that front shortly. This deal can be financed.”
In addition to the Yawkey Trust’s 53 percent stake in the team, the Red Sox organization is owned by seven limited partners, whose shares are not up for sale. A new owner must be approved by a majority vote of the limited partners, including Harrington. The votes are distributed according to the percentage each partner owns. A bidder will need 12 of the 23 total votes held by the partners.
The sale must also be approved by Major League Baseball, which examines the financial, personal, and legal background of potential owners, along with their plans for the franchise.
Harrington said yesterday that he expects to sell his personal stake in the team at some point, but his 2 percent share will not be part of the Yawkey Trust sale.
At the end of the legislative session in July, the Legislature approved a bill providing as much as $312 million in city and state aid for the ballpark project. But the plan still must get City Council approval, and a majority of members have said they will vote against it.
The question now is whether political leaders will keep working with Harrington to nail down final details of the ballpark plan or if they will freeze action until the new owner is identified.
Ballpark boosters, however, warned that if the city delays, the eventual new owner could decide to move the team to a cheaper site outside of Boston.